LIBERTY TAX SERVICE Franchise Complaints
UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
with the Liberty Tax franchise, please share a comment below.
Entrepreneur magazine has ranked the Liberty Tax Service franchise #3 behind McDonald’s & Subway. However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.
This post was originally published
BostonTax wrote:
I’m a former Liberty Tax Franchisee
I hope you are ready for a little enlightenment! I held a successful Liberty Tax Franchise for 5 years until I decided to let the franchise agreement lapse. I did this for a few reasons:
1. The royalty fees were outrageous! 14% went to normal royalty while and ADDITIONAL 5% went for so called advertising royalties. The ad royalties were supposed to be put back into your local market to build the brand name. This was never done! All advertising in addition to the ad royalty I had to pay for because it did not fit into Liberty’s concept of advertising. I don’t know exactly what the concept was because our AD could not give an answer and the approved methods changed by the week.
2. Corporate was totally unresponsive to the needs of the franchisees. The AD system is designed to recruit anyone who can write a check for 100K. No other skills or ability required.
3. The minute you are behind in a royalty payment, they send you a notice to cure. After that, if you don’tpay, they try to terminate your franchise agreement.
4. Upon termination, Liberty enforces through legal proceeding a 2 year, 25 mile radis non compete clause that is in the franchise agreement. This is enforceable in the Eastern Division of the Federal District court, where, at least 2 Liberty friendly judges preside.
5. Liberty does not recognize chargebacks for bad debts as an adjustment for your royalty fees. All royalties are based on your gross, not your net collectable. This was an ongoing issue with them and the accounting department did not have the ability or the inclination to resolve!
My best advice is do not go with these guys, they are bad news. If you like to have people collect royalties and provide no support, then this is the franchise for you! It is very expensive to get into, the initial fee is around $32K just to buy the territory plus those pesky royalties. You can’t make money on this concept.Most of the surviving franchisees I’ve talked to in the last 2 years have experienced great difficulty not only in making a profit, but in the corporate support or lack thereof.Remember, 19% of your gross is getting kicked back to Liberty, which is excessive by any standards. Please do yourself a favor and call former franchisees ,those that are currently getting sued (they are very likely to talk, as I found out), and current ones to try to get the straight poop.
Barbara Green wrote:
I too was a Liberty Tax Franchisee and I agree with everything you said.
The only reason for purchasing any franchise is because the business model is a proven marketing success as evidenced by the profitable franchisees. That is why you pay a license fee of $25,000. Being profitable is not in the cards for a Liberty Tax franchisee. Liberty Tax’s market/ business model is aimed at individuals who have very simple tax returns, i.e one W-2 and standard deduction which is why they were very successful in Norfolk, Va. That market is full of military people with one w-2.
Liberty will sell anyone a franchise at any location, in any georgraphic area, even if there is not a chance in hell of the franchisee being successful.
At one time, I too owned a Liberty Tax Franchise for one tax season. It was only one season because of the behavior of the Regional Manager who called me on January 15th demanding and screaming “Why had I not generated 200 tax returns and that maybe this business was not for me. I was stunned and confused since employers are given until January 31st. to give w-2’s to employees. Apparently, he thought that I was in Norfolk, Va. where that is possible.
It only goes downhill from there. The bottom line is I lost all of my investment in this businees (approx. $80,000) because I closed it rather than becoming a victim of this unethical company. NOthing would make me happier than to be a part of a class action lawsuit.
WHAT DO YOU THINK? DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE? ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY? WHY OR WHY NOT?
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Guest4:
Now in particular that you are enjoying my comments so much, I think I will continue them! :) Thank you so much for your kind remarks.
Obsessive compulsive? Not when you hear my story. Oops. Guess you won’t. You’re tired of reading of my posts, so I’ll make sure I let everyone else know my juicy story. You……..well I wished you well and I will continue to wish you well since I wish no one any harm. But I have been a franchisee and an ex-franchisee for years, not to mention a lot of years of experience prior to this cult experience and I know what is happening now is fraud, racketeering, ponzi activity etc.
You think I’m taking up too much room with my posts? Let’s see, 2000 posts dating back to 2009 and I only began writing anything maybe a year ago or less. You also have the option of not reading my posts, isn’t that right???
I will not be available to pick up the pieces of your life when you are left high and dry by this piece of s–t company. As I said before, I don’t want to be nasty to anyone and my posts have been directed to JTH and LTS. But if you insist on directing your anger issues to me, I will fight you back.
C’mon, Guest4: Don’t be a moron. This thread is about unhappy franchisees. If you are one of the few happy ones, you don’t even need to be here! However, I know what’ll be happening to you down the road, and you will certainly without a doubt become an unhappy franchisee. No question.
Its nice to see a Hewitt plant as Guest4. To set the record straight, the 50 count store was the last one I opened out of 5 and my average net fee was above $225 which was the lowest of all my stores. Fees ranged on average toward $300. Keep drinking the Kool-aid, Guest4! Your in trouble when you start to believe your own BS.
I have nothing else to say right now. I just wanted to get on Guest4’s nerves some more by making another post. Gee, this is fun! :)
I don’t think Guest4 is a zee. He/She is just a plant.
Clueless is how Liberty tax wants you to be”Guest4″ . It seems to me that “SanFran” has a more interesting story to tell than your mindless support of John Hewitt. Its real interesting that anyone who did 50 returns yesterday is spending today on a clearly ant-Liberty franchise site instead of taking care of business. How many of those returns you did were free? How many do you expect to collect fees on? How much of your hard work is going to line the pockets of John Hewitt? Its funny that you are obsessed with defending Hewitt and his Hitler Youth group as opposed to counting the money you earned yesterday! Oh, that’s right, you got no money because the returns are either frauds, non paid’s or both. Lucky for me I’m out of this scumbag infested business and I don’t have to deal with the head scumbag anymore: John Hewitt.
@Scammed – I was going to type the same thing. Out of 50 returns, did anyone pay up front with cash, check or debit/credit card? Most likely not, just bank products with at least a 30 percent loss not including some rejects and frauds. How many did you have to pay $50 for them just to walk in the door? 3 stores and only 50 returns, so that is 24 hours of opening at the minimum, which is about 2 an hour and it took three stores to write that many returns. I am sure one store did the bulk of them and the other two or one is a dud. Hi Hewitt. You are on your way to being a top gun…. Watch out for the IRS agent’s who are going around checking high return offices…
SanFran you need to post again!!
San Fran: We enjoy your contributions even though they come from unhappiness. Keep up the good work because there are a lot of us out there with the same unfortunate experiences with these crooks.
The truth needs to be pointed out and it is not getting out to the masses except through this blog. Had this been around back when I was looking at Liberty, which I scoured the internet for info and found NONE, I would of not been in this situation. I am grateful for people posting on this blog, because it feels in this company we are shunned for being failures, by not writing frauds to pay the bills.
@franchizee – Same here! I did my due diligence and called all the local owners that were listed in the disclosure statement, but come to find out, they are not allowed to say bad things about Liberty and I probably did not get a 100% honest answer about the business. Had I seen this site, I would have ran for the hills! Oh well, at least it can help others make a more informed decision. The sales people are a joke, I remember my lady putting me in touch with another Liberty owner. Well, I found out AFTER I signed that he was the #1 guy in the whole Liberty system and he was in California!
Guest4:
As a 4 year Zee, you are undoubtably nervous. You have an important decision to make. Do you sign on with these crooks for another 5 years or do you walk away with nothing? That’s it, two choices.
Hmmm, let’s examine each of your two choices.
1) Sign on for another 5 years— By doing this, you will be trapped even more than you already are now. You will be continuing to build your relationship with your customers…..you know by now that the customers come because of you and your service, don’t you? They certainly are not coming because they saw a Liberty TV ad……..so you will continue to pay JTH at least 19% Royalties for work that you yourself are doing and should be reaping the benefits of. And with multiple offices, it’s a lot more work. And by the way, your employees are ripping you off behind your back because you can’t be present at all the offices. So you are working very hard each & every day to make sure your customers are happy, your employees are happy, JTH is happy because, after all, he is lining his pockets with your hard earned money……….
or choice 2) which is walk away with nothing. You lose everything. There is a reason that they have an enforceable 25 mile, 2 year non-compete. Not 24 miles, not 23 miles……..25+ miles away. Most customer won’t drive that far to get their taxes done. Imagine that!
So, Guest4, I can understand why you are lashing out at me. With a choice like yours I’d be pretty upset too. I did have the same choice as you and it turned my world upside down. So I’m posting this message as a warning to you and any other Zee out there…………..they will find you no matter how many offices around the country close at once. They will work their Lawyers to the bone day & night to come and drag you to justice.
Got you scared? That’s the way JTH works. By intimidation. With your hard earned money. The sooner you realize that I’m here to warn you, Guest4, the better position you will be in to get legal advice NOW, before you reach that 5 year contract end.
Good luck to you. Fasten your seatbelt, you’re in for a bumpy ride.
@ All: Dont bother with these jack arses that support Lberty, If Liberty was such a good thing they wouldn’t be doing the TRY BEFORE YOU CRY! or any other gimmick to unload territories!! The fact that remains, that this industryis in BIG trouble, just wait until the numbers come out Our one goal has to remain TELLING THE TRUTH TO PROSPECTIVE FRANCHISEES!
@Mike and everyone, No one need to go down this path of destruction, let’s head off as many as possible. Some people were successful and still posting on this site. I am successful in my mind however my account’s and tax return’s show a different reality!
I just got a list of the top zee’s and it is incredible the amount of money being made (gross). I am nothing in this company….However what is most interesting, is over 3,000 entities are not making it at this time of the tax season, the rest are….The top gun’s are changing every year. There are people I have never heard of making a killing or at least on paper.
Mr. J Arrington I may have some information that may help support your case against JTH . Contact me through the Admin.
Liberty Tax is full of sh@!, they prey upon poor communities just to make a buck for filing a 5 minute 1040EZ and charges you an outlandish preparation service fee along with other fees. I find there work ethic and professionalism to be unduly kind to the community they service. There nothing but a rip off. I would not recommend no one to be a party to their unethical behavior towards its customers. Its a franchise yeah a scamming franchise.
Anyone have any numbers to share, the free place is still packed so people are filing just not at any paid place, Block, JH and Liberty all Dead!
Mike: The first real #s released should be Turbo Tax that will do a volume release on Feb 21st with results through mid-Feb.
Does any current or former franchisees (or customers that have experienced the same) have any advice or information related to their “Satisfaction Guarantee” ?? I’ve had a franchisee outright refuse to honor it!
Paul,
You need to call [redacted] and ask for Mr. John Hewitt, he is in charge of customer service. He should be able to get your money back. You must not let them put you on hold or say he is busy and will call you back. They really don’t like to part with your money, but if you are persistent they will honor the money back guarantee, but only if you demand to talk to him. Good luck let us know if you get your money back.
Good Luck! I highly doubt you will get any money back. Best thing to do is make sure your friends/family/neighbors and others in the area know about your bad experience. Hit em where it hurts!
I had customers that I know where hard up for cash and said they were unsatisfied just to get their fees back. Some complained to corporate and called my AD and I was told if I did not pay them corporate would and then charge me for the refund and then take it out of the fee intercept process.
Mike says:
February 12, 2013 at 4:49 pm
Anyone have any numbers to share, the free place is still packed so people are filing just not at any paid place, Block, JH and Liberty all Dead!
Mike, sounds like you are hoping the whole industry goes under so you can feel better about your failures. Wishful thinking. IRS is down more than 20% as of today compared to last year. Should be back to normal by March. You, however will get together with SanFran and keep crying about your failures!!! Just to let you know, nobody cares about you.
It seems the longer it takes the IRS to send refund’s the more refund’s on tax prep fee’s. I have heard other zee’s especially last year having to give back refund’s because it took about 3 wks or more to get a person’s refund. I don’t use the satisfaction guarantee at all, due to the fact anyone can be dissatisfied no matter how well you did the return. I took my guarantee out of my packet several years ago and don’t put up the poster nor use the potato head signs. Also, Liberty has put themselves out there like they have control on how fast your refund come’s to you, except it was not a refund but a loan. People have this misconception and Liberty has fueled this misnomer for many years!
I wonder if the return counts are down partly because of the additional scrutiny and due diligence regarding EIC. I know in NJ they would send a letter demanding about 7 pieces of documentation before they would release the refund if it had EIC. Might have scared some of the low-life taxpayers and preparers away from filing fraudulent returns.
Hewitt and his 40 thieves have perpetuated failure on behalf of the franchisees. When a comment by someone who is not really in touch with reality says that a few people are only crying about their failures, that comment exudes an ignorance that is just the nature of Liberty Corporate. Failure, unfortunately, is an option in the Liberty system. That is what it is designed for. If, by accident, as I did, you actually get successful, you wonder what your royalties are really paying for. You get no support. You have no national advertising. Your AD’s have no sense of the business. You have innumerable amounts of reporting paperwork to Liberty which is meaningless, your profits are zapped by payroll, rent, utilities, supplies and of course those high royalties! Commentary by people who purport to be successful and disparage those that realize this system is a sham, show their true ignorance and allegiance. I love it when the Hewitt plants contribute to this site because it shows how aggravating we are to Liberty and the Hewitts! Let’s keep this going and keep up the good work.
@balancetrend – The extra documentation of EIC has really hurt the industry. Some preparer’s systems don’t have the 8867 and those people’s tax returns are sitting in the IRS system for more research. It is true, we need proof that a child is related to the person and they live with that person and that person is truly the guardian of the child. So far, I have turned away many people with those similar problems. They cannot prove these children are related to them. Most people are down in Liberty and it goes to show, that the early return’s were mostly fraud, because making $4,000 a year with a kid on your return get’s you $2,000 to $3,000 back? Why should we file that return? It is under $9,980 or whatever the magic number is….The IRS should have a way of blocking EIC from those low income earners, under a certain amount, you don’t receive EIC – Get to WORK!!
@balancetrend – Is the letter from the IRS?
@scammed – Are still with Liberty? I am and wished I was on my own, maybe someday. The larger zee’s took the bulk of the business when they first went in to a territory. It is hard to compete especially with the new regulation’s, but the old zee’s just do business as usual, so I am not sure if they are following the new regulations with EIC. Their numbers are not that far off.
@franchizee – Yes, it has hurt the industry, but its a good thing. The IRS (and the tax preparers) job is to make sure the taxpayer pays as little tax as possible, but not by committing fraud at the expense of the honest taxpayers.
I have not seen this at the Federal level, but NJ was brutal last year, which is great for those who are trying to work the system, but bad for those who are legit and have to wait 8 months for their money.
I had a girl call me this year and said she had no income, a few kids and usually gets a lot of money. She then asked me, “do you do work like that?”. While I knew exactly what she meant, I played dumb and asked her what she meant. She was very careful not to come out and say, I want you to file a fraudulent return, but of course, I politely told her that I do not do tax returns that way. Part of me was hoping that it was an IRS plant trying to weed out bad preparers, wouldnt be a bad idea for the IRS to do.
@balancetrend – Thanks for the story. The problem with EIC early filers, there was no BUSINESS, it was FRAUD aided and abeited by the big three. They set up the bank products and encouraged the early filers to work as little as possible to qualify for the EIC. In the housing development’s they (being the head honchos) have meeting on how to file tax returns with other people’s kids. It seems this is a racketeering system, where the poor people file tax return’s and share it with other or a percentage goes back to head honchos. I kick them to the curb every single day because I am a TAXPAYER and have paid millions over the years in taxes. Go get a JOB and get off the DRUGS!! I am obviously not Politically Correct! HA
Paid preparers are losing a large share of the EIC business to online. The IRS needs to do more due diligence on those online EIC returns as well. Otherwise, the IRS sets the bar higher for paid preparers than online and hurts professionals’ businesses.
@ Dr Zhivago – Amen Brother! I wonder if any of those returns are being flagged for being a self preparer?
I am not with the Liberty crooks anymore! I even got out of the industry since I was sick of the low life’s I had to deal with!
GET A LIFE…WILL YOU!
GET A LIFE …WILL YOU, AND STOP TRYING TO PUT OTHER HARD WORKING BUSINESS OWNERS DOWN…JUST BECAUSE YOUR BUSINESS FAILED … PLEASE DONT TRY TO BRING THE REST OF US HARD WORKING PEOPLE DOWN. NEXT TIME YOU GET A BUSINESS OR A JOB…TRY WORKING A LITTLE HARDER AT IT…MAYBE YOU WILL DO BETTER.
dr. zhivago – great point the people who file these type of returns aren’t afraid of the consequences. They just need a willing partner to help them get it done. Right now it’s only the preparers who are being punished (no lobby) so the crooks turn to tax prep. software and debit cards to beat the system.
@scammed1 – Congrats!
Anyone know where I can get some client folders? Both the ones for the client to take with them when the return is completed and more importantly- the ones we keep that has the name and type of return, who started and finished etc. the ones we keep the clients info in?
@Mike – Do you mean the ones produced by Office Max?
Thanks Zee, they are the ones that the preparer can make notes on the back and they can mark on the front – who started and finished the return and on the top of the front it also has the clients name and social year of return etc. Those are the ones I need.
@Mike – I have not purchased any, but I think they are the client packet which is like a manila envelope and it has a ton of info on it.
NC Hillbilly:
Jerry Arrington is a very busy guy. My advice to you would be to find his phone number through Trisha or Admin here and call him yourself and leave him a msg.
This website is called “Unhappy Franchisee” for a reason. People who post messages on this website are doing so because they are very unhappy with their franchise experience. It certainly does not mean that they were any less “hard working” then others. It just means that they have figured out what a schlock operation this company is and what scam artists these people are.
Our businesses did not fail. Far from it. What failed was our trust in the system to treat us with respect and honesty. If there is an award for ripping people off and being professional con-artists, JTH would win hands down.
The toughest part of being a LTS franchisee is knowing now how devious they are and how deceptive they are. This website is a godsend to spread the word for new or prospective franchisees to be fully aware of what they are getting into.
Disengaging from this company after a 5 year contract is ridiculous. They have their lawyers ready to pounce on you. Maybe all franchises are like this, but I only have experience with this one and it is a total scam job.
My personal hope is that not only does Jerry Arrington GET JTH, but somehow manages to close down the whole company, stock company or not. And SOON.
@6 Yr Zee – Congrats on being so happy with Liberty. If you are so happy, why don’t you use your name and entity number? Majority of zee’s with this company are not making any money but still have to pay royalties and marketing. Saw a list of the top 350 of the company, there are still many more who are not even close to these numbers. It spans from $3.3 million to $128K in net fees. Most are down from the year before. Of course most are doing well, because they are in a large metro area or are the first zee’s in their territories and won the lion share prior to anyone else being sold a pig in a poke!
Another Liberty plant is 6yr Zee. All of us have to keep in mind the non-disparage part of the contract, if it is indeed enforceable. Obviously, John Hewitt and Danny Screwitt monitor this site because they are afraid. Keep their fear running!
@Scammed1 – You know most of the happy zees are not zees but home office people posing as zees. Most of the people in home office are FAILED zee’s and are sucked into the system to pay back their bill to Hewitt. The problem with this contract is, they will sell to anyone, even if there is no chance of even breaking even, this is where the fraud and deceptive practices are constantly being broken. However, without sites like this, that are trying to send out a warning, most of us here, would of never bought into the system or at least would of had a head’s up that there is a possiblity of failure even with the “Hewitt” system. It does not work in most areas, unless you have low info customer’s. Which is system is predicated towards.
I am sure my 5% marketing fees go to the home office to fund these posters, so at least I can track where my money is being used against me! So they can sell more territories and get at least the minimum royalties! This is “how we hewitt”as Danny loves to market!
ANYONE CONSIDERING BUYING A LIBERTY TAX SHOULD BE VERY CAREFUL AND READ ALL OF THE POSTS!! There will likely be a mass exodus of franchisees after the horrible paid tax prep market.. There are SOOOOO MANY FREE PLACES, AARP, and VITA ARE EVERYWHERE..just go to the IRS.gov and look up free tax prep, not to mention, Salvation Army, Check out the EITC Coalition, Goodwills all the colleges and universities, all the military bases and many churches etc. THE PAID TAX INDUSTRY IS DEAD…STAY AWAY AND KEEP YOUR MONEY.. BUY A DIFFERENT FRANCHISE!!
There is still a business for tax prep, but being a franchisee is gone. Mom and Pop’s are the way to go, the big tax prep fees are in the past.
The paid market is only good for higher AGI’s, say 75-80 plus, definately over for those that don’t itemize.
@Mike – Yup – that is my main market!